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RE: Obama says Economy is getting better - 7/16/2010 12:03:12 PM
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davemiller7
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Yeah, that's real recovery! 9.2% unemployment when Obama claimed it wouldn't go above 8% if we paid his ransom.
quote:
ORIGINAL: its_GO_time
The Groovy Summer of Recovery Continues.
_____________________________
"Here I stand. I can do no other. God help me. Amen." - Martin Luther
The Prayer of Protection
The light of God surrounds me
The love of God enfolds me
The power of God protects me
The presence of God watches over me
Wherever I am, God is.
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RE: Obama says Economy is getting better - 7/16/2010 12:07:46 PM
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StephK
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That 9.2% unemployed doesn't factor in all the people who ran out of unemployment and still unemployed. That doesn't include the thousands who have been put out of work from the gulf coast region either.
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Stephanie
"Our God is not to be worshipped as one among many good and true beings, but as God alone; and his gospel is not to be preached as one of several systems, but as the one sole way of salvation." - C.H. Spurgeon
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RE: Obama says Economy is getting better - 7/16/2010 12:37:08 PM
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gcsjr
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quote:
That 9.2% unemployed doesn't factor in all the people who ran out of unemployment and still unemployed. That doesn't include the thousands who have been put out of work from the gulf coast region either.
Yes it does. The unemployment numbers have nothing to do with people who receive unemployment. It is based on a monthly survey of approximately 60,000 households across the U.S.
Here's a link to the BLS site that explains the methodology they use to calculate the unemployment rate:
U.S. Unemployment Rate
It's not perfect, but it's about as accurate a picture as anyone can get of the real unemployment situation.
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RE: Obama says Economy is getting better - 7/16/2010 1:11:38 PM
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GroupW
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gcssmith is correct on this one.
I think you're getting confused between the "discouraged worker" phenomenon (which does not show up in the unemployment rate) and workers not covered by unemployment insurance (which DOES show up in the unemployment rate.)
The unemployment rate is defined as a) people unemployed & looking for work divided by b) the workforce.
The catch is that the workforce is defined as people working or actively looking for work. If you're fed up and stop looking for work even if you would otherwise really WANT to work, you don't count as part of the labor force. If you're part of that discouraged worker set, you never show up in either a) or b) above.
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“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/16/2010 1:24:08 PM
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GroupW
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quote:
ORIGINAL: davemiller7
Yeah, that's real recovery! 9.2% unemployment when Obama claimed it wouldn't go above 8% if we paid his ransom.
quote:
ORIGINAL: its_GO_time
The Groovy Summer of Recovery Continues.
A few insights from an econo-geek...
What was underestimated at the time was the degree of overreaction by employers in the economy (particularly after the Lehman failure) as well as the impact of a financial logjam on credit availability. Production got cut back further than it actually needed to, and producers had difficulty in obtaining short term credit & chose to conserve cash with some layoffs that were more severe than what we would historically suspect. The degree of credit contraction and the speed & depth with which businesses reacted exceeded what we've come to expect.
You saw some of that unwind earlier in the past year with industrial production ramping up very quickly after about June. Unfortunately, the ramp up in production came with only about a million or so new jobs created. Based on the past few recessions, we've seen a lengthening in the amount of time that businesses can defer new hiring so the lag between GDP growth and employment growth continues to lengthen.
A lot of that increase past 8% was already baked in the cake by late 2008. We just didn't know it. Personally, I didn't expect unemployment to rise much above 9-9.5% based on prior contractions, so even though I had a front row seat in the whole mess I was just as wrong as the rest in underestimating the impact of what we were going through.
Just as a measure of how unprecedented this was: during the depths of the crisis, we were seeing some highly secure financial assets losing more value in an hour than they had in all of the past 10 years combined. No wonder then that all lending activity dried up.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/16/2010 3:32:25 PM
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ayani
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As always, I find your comments interesting GroupW.
quote:
ORIGINAL: GroupW
Production got cut back further than it actually needed to, and producers had difficulty in obtaining short term credit & chose to conserve cash with some layoffs that were more severe than what we would historically suspect. The degree of credit contraction and the speed & depth with which businesses reacted exceeded what we've come to expect.
And, from my experience, and what I read and hear, credit for businesses really hasn't started coming back yet. Banks have gobs of cash, but are very reticent to lend. They seem to be
1) very very nervous about where the economy is going.
2)terrified of regulators second-guessing their lending decisions and forcing write-downs, and
3) very uncertain about what financial new regulation is coming down the road.
Only the strongest-of-the-strong companies are able to get money for projects now, they are able to get less of it, and and under much less favorable terms than in the past (strict covenants, more guarantees). Most of the alternative financing sources I am familiar with have dissappeared. Seems like mid-grade businesses are almost shut-out, not to mention weaker ones. The inability to do projects results in less hiring, or fear of re-hiring.
In addition, with access to short-term financing uncertain, many businesses are hoarding cash as a 'rainy day' fund, rather than investing that cash in something new and using the debts markets as their 'rainy day' fund. To some degree this is good, as those companies will be stronger with all that cash. However, it really is causing employment growth to lag.
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RE: Obama says Economy is getting better - 7/16/2010 8:45:11 PM
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GroupW
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I would say you are mostly right. A couple of notes:
1) at the top ofthe list of why banks are reluctant to lend is that they simply have very limited capacity to do so. Something along the lines of 1-2 trillion dollars of lending capacity disappeared from the industry. Until we have a bit more clarity of how many losses remain to be recognized, it's going to continue to be tight. The other factors are true but pale in comparison. The new regulations however don't appear to be all that impactful. The worst aspects from a banking point of view have been mitigated. The only big item in the bill causing much concern would be how much capital needs to be raised to support derivatives activities and how much needs to be raised to replace the trust preferred issues currently counted as Tier 1 capital.
2) capital spending is actually one of the bright spots. Businesses have begun spending on productive capacity again. Much of our GDP growth to date has come from businesses buying equipment.
3) credit is flowing but it's binary. The bigger and stronger companies can get credit on reasonable terms. Smaller and weaker firms however are having a rough go. That actually makes sense given what I said above about limited lending capacity. If you don't have the capital to lend, you are going to be mighty sure that every last dollar is recoverable.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/16/2010 8:50:47 PM
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GroupW
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Forgot to add that your comment about short term credit drying up was spot on.
Commercial paper, the bankers acceptance, and interbank markets were among the first markets to lock up. The markets supply most of the short term credit for medium and larger firms.
There are some interesting stories about why that occurrd but they are only interesting to people like me, so I will spare y'all the pain.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/23/2010 12:17:00 PM
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its_GO_time
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This message brought to you by Joe Biden's Fuzzy Math
quote:
he said. “There are 3 million [more] Americans working today than there were before we took office.
Hoooookay...
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"If we would rise to dignity, it must be by considering his humiliation
and his sorrow." -C.H. Spurgeon
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RE: Obama says Economy is getting better - 7/23/2010 12:49:41 PM
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GroupW
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Even I can't figure out how to defend THAT statement.
You have to give Biden props for entertainment value, though.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/24/2010 10:50:34 PM
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its_GO_time
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AR Democratic Senator Blanche Lincoln said it best at some WH summit: Although she claims it was one of her constituents. She said that no one in this administration knows what it means to go to work on Monday, or make a payroll on Friday... true dat. No wonder they want her gone.
_____________________________
"If we would rise to dignity, it must be by considering his humiliation
and his sorrow." -C.H. Spurgeon
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RE: Obama says Economy is getting better - 7/26/2010 11:36:03 PM
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leonfigg3
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From what I have heard, and understand, the economy only looks like it is doing better because everyone is affraid of January 1, and what the new tax programs and health care program will actually entail (since only "fear mongers" and the like are the only ones who bothered to try to read it The representatives in many states sure didn't bother to)
The economy seems to be doing better because many business want to report profits this year and pay in accord to tax laws presently on the books. Come January, hardly any business is going to declare any kind of profit fearing that extortion by the Federal government in the form of punitive taxation. (Punitive because they dare to succeeed without government help)
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RE: Obama says Economy is getting better - 7/27/2010 11:32:34 AM
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GroupW
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My whole paycheck is based on knowing this stuff, and it's not what I'm reading. Growth is currently being led by a recovery in inventory levels, capital investment, and a small increase in demand for goods which is being amplified in terms of corporate profits by a tremendous amount of cost cutting done in the past few years.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/27/2010 7:07:17 PM
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its_GO_time
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quote:
My whole paycheck is based on knowing this stuff, and it's not what I'm reading
So, what's keeping the economy from cutting loose?
IMO, it's the current adminstrations drive to create the mythical "green" economy(ask Spain how that's going for them), and the piling on of regulation, and the threat of taxes.
_____________________________
"If we would rise to dignity, it must be by considering his humiliation
and his sorrow." -C.H. Spurgeon
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RE: Obama says Economy is getting better - 7/27/2010 7:38:11 PM
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GroupW
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The green bit isn't really material in today's economy. Maybe it will be someday, but for now it's not a significant portion of the economy or aggregate spending.
Regulation is possibly a bit of a negative, but it's not huge. FinReg is the biggest issue out there right now, but apart from some technical dynamics having to do with bond ratings and securitization it's not having much immediate impact.
Threat of taxes is one issue. It's not huge but it's an issue. For the most part though, a few percentage points in taxes at the upper income levels we're discussing won't move the needle all THAT much.
The answer is really more basic. People are overlevered. Governments are overlevered. States are overlevered.
At some point, we have to consume less and save more. Saving more in the long run will help us, but in the near term economic growth is going to suffer.
Companies know this is coming, but can't really yet guage the magnitude or the timing of the change in consumption patterns here in the US & Europe, so they are going slow on hiring. The slower hiring goes, the slower the recovery.
It's pretty much that simple. We would like to pin the blame on someone - the administration, the Chinese, congress, etc. - but the real answer is a lot closer to home.
Edit:
Good question, BTW.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/27/2010 9:08:03 PM
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GroupW
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Forgot one of the other big reasons.
The money supply fell dramatically during the crisis and has not yet really recovered. Think of it this way:
GDP ( the value of all things produced here ) is basically equal to the amount of money in circulation multiplied by how many times each of those dollars gets spent
Think of "M" being the amount of hard currency in the system and "V" being the number of times each of those dollars changed hands.
M x V then is our "effective" money supply.
During the crisis, "V" declined precipitously and hasn't really recovered. The Fed has added a lot of "M", but not quite enough to offset the decline in "V". As a result, and combined with other challenges we face, the economy just hasn't improved as rapidly as normal.
So basically, we have both a fiscal/spending/savings problem as well as a monetary problem.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/28/2010 8:33:26 AM
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davemiller7
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Can we say uncertainty (read "fear") on the part of corporations. They cannot be certain that at any time, the government is going to say " you're not being profitable and you're too big to fail," and take them over, or at least "manage" them - like banks, GM, the healthcare industry. If not taken over in some manner, they might well be taxed to death. Congress and the current administration (regime) have moved in on American industry like a bull in a china shop.
quote:
ORIGINAL: its_GO_time
quote:
My whole paycheck is based on knowing this stuff, and it's not what I'm reading
So, what's keeping the economy from cutting loose?
IMO, it's the current adminstrations drive to create the mythical "green" economy(ask Spain how that's going for them), and the piling on of regulation, and the threat of taxes.
_____________________________
"Here I stand. I can do no other. God help me. Amen." - Martin Luther
The Prayer of Protection
The light of God surrounds me
The love of God enfolds me
The power of God protects me
The presence of God watches over me
Wherever I am, God is.
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RE: Obama says Economy is getting better - 7/28/2010 8:55:37 AM
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GroupW
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It's just really not the thing that business leaders are afraid of.
Realistically, it just doesn't make business leaders' top 100 list of things to worry about. It's pretty much as simple as I wrote above.
They really are more worried about if their sales levels are going to increase, stagnate, or decline. That's the big unknown. Everything else pales in comparison.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/28/2010 9:07:00 AM
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davemiller7
Posts: 1262
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Well, if you make corporate execs concerned about the future, they won't invest in R&D for the future, or hire people and buy materials to produce goods for the here and now. Fewer people getting hired, fewer paychecks, fewer sales. Now, if a lot of companies are doing this, there will be fewer consumers out there to buy their goods and services.
quote:
ORIGINAL: GroupW
It's just really not the thing that business leaders are afraid of.
Realistically, it just doesn't make business leaders' top 100 list of things to worry about. It's pretty much as simple as I wrote above.
They really are more worried about if their sales levels are going to increase, stagnate, or decline. That's the big unknown. Everything else pales in comparison.
_____________________________
"Here I stand. I can do no other. God help me. Amen." - Martin Luther
The Prayer of Protection
The light of God surrounds me
The love of God enfolds me
The power of God protects me
The presence of God watches over me
Wherever I am, God is.
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RE: Obama says Economy is getting better - 7/28/2010 10:08:29 AM
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GroupW
Posts: 2874
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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quote:
ORIGINAL: davemiller7
Well, if you make corporate execs concerned about the future, they won't invest in R&D for the future, or hire people and buy materials to produce goods for the here and now. Fewer people getting hired, fewer paychecks, fewer sales. Now, if a lot of companies are doing this, there will be fewer consumers out there to buy their goods and services.
That's exactly right. What has them concerned, however, is really a couple of big things.
1) Will demand for my product hold up, decline, or remain the same. Will people have the income to buy what I make or offer?
2) Will banks & the credit markets be able to provide credit for me, my suppliers, my clients or the clients & suppliers of my clients?
3) Will we have inflation or deflation?
What determines #1 is really the spending capacity of firms, individuals, and governments. 2 of those 3 are way overlevered with minimal spending flexibility.
What determines #2 is credit demand and supply. With banks still operating on thin capital, that's tough as well.
#3 kind of falls out of whatever happens with #1 and #2
I get 75-200 emails every day on the economy, markets, companies, and issues. When I read the earnings reports, analyst reports, economists pieces, etc., those two things are what people are worried about.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 7/29/2010 12:09:18 PM
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its_GO_time
Posts: 789
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quote:
Edit:
Good question, BTW.
And kudos to you for being able to answer it, without the following words/phrases: "inherited", "Bush" ,"Cheney", "past eight years", and "failed poilcies"
_____________________________
"If we would rise to dignity, it must be by considering his humiliation
and his sorrow." -C.H. Spurgeon
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RE: Obama says Economy is getting better - 7/29/2010 2:44:26 PM
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GroupW
Posts: 2874
Joined: 11/16/2007
From: Up in the hills of Colorado (very BIG hills...)
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I try my best (but often fail). Not that they were innocent, but there were too many people who made too many mistakes to blame the whole mess on just a few....
A couple of factoids from today's mess of emails:
Profits are exceeding expectations right now by a 2 to 1 ratio (2 upside earnings surprises for every 1 disappointment). Revenues, however, are running about 27 disappointments for every 24 positive surprises.
Companies have slashed costs, so profits are in decent shape. Companies are investing fairly heavily in capital goods (i.e. they have good cash positions today) to further increase productivity, but reluctant to hire (i.e. they are uncertain how ongoing cash flow will hold up & are trying to keep ongoing monthly expenses low).
Consumers don't seem to be spending money, although corporations are.
The problem really seems to be a top-line / revenue / sales type of issue.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Dort, wo man Buecher verbrennt, verbrennt man am Ende auch Menschen." - Heinrich Heine
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RE: Obama says Economy is getting better - 8/8/2010 1:50:59 PM
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its_GO_time
Posts: 789
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Outgoing Econ. Adviser Christina Romer says: the disappointing(jobs) report proves the need for more government intervention in order to revive the economy.
Agree? Or, is this why she's leaving; She cannot keep spouting the spin every month?
_____________________________
"If we would rise to dignity, it must be by considering his humiliation
and his sorrow." -C.H. Spurgeon
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RE: Obama says Economy is getting better - 8/9/2010 7:34:58 PM
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its_GO_time
Posts: 789
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No "Good Vibrations", on this Endless Recovery Summer
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"If we would rise to dignity, it must be by considering his humiliation
and his sorrow." -C.H. Spurgeon
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